Private Credit: Alternative Lending

The AIC is the premier trade association for private credit in Washington – representing over 2/3 of the industry.

Private credit has emerged as a critical financing option providing flexible, long-term capital for thousands of small and mid-sized businesses that may not have access to traditional bank loans. Private credit supports well-paying jobs and real economic activity, from manufacturing and healthcare to infrastructure and energy projects.

Private credit has delivered strong, consistent returns and has become an important diversification tool for long-term investors such as pension funds, insurers, and college endowments. Scroll down to learn more about how private credit is helping businesses and the economy.

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Private Credit Fuels Small Businesses.

Hear From Small
Business Leaders

Private Credit Allows For Better Benefits

Founder & CEO of Otter Learning Chase Begor shared how private credit has strengthened his business and allowed them to provide their schools’ employees better health, dental and vision insurance, 401Ks, and other benefits.

Private Credit Helped Us Become Better and Improve Our Operations

Founder & CEO of Otter Learning Chase Begor “We talk to business owners constantly who are looking to sell or not looking to sell. But they always say, we're starving for someone to have a conversation with about how to become better and how to improve our operations.

AIC in the News

AIC Letter in the Wall Street Journal

AIC CEO Will Dunham authored a letter to the editor in the Wall Street Journal highlighting the resilience of private credit and its ability to manage…

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Grown-Up Capital, Not Systemic Risk

AIC CEO Will Dunham joined the Fund Shack podcast to explain how private credit serves as a critical source of funding for small and mid-sized businesses.

Private Credit Is Fueling Small Businesses and Manufacturing

AIC Senior Vice President of Research Jamal Hagler published an op-ed in DC Journal on the many ways private credit powers the U.S. economy, helping b…

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What is the Impact of Private Credit on the U.S. Economy?

$ 625 B

Invested in more than 3,700 companies across the U.S. in 2024

2.5 M

Jobs supported by private credit in 2024, earning $217 billion of wages and benefits

182

Employees, the size of the median company receiving private credit

How Does Private
Credit Work?

Businesses depend on two main sources of outside funding: credit and equity. Private credit, like private equity, helps strengthen and scale businesses of all sizes. But instead of owning part of a company, as private equity funds do, private credit loans provide an alternative to traditional bank lending and can be tailored to the specific needs of the borrower. Companies of all sizes and sectors receive private credit loans, including healthcare, infrastructure, technology & IT, and more.

Who Benefits From Private Credit?

Small & Medium Businesses

Benefit from greater access to flexible, individually tailored loan structures that allow businesses to expand operations, invest in equipment, pursue long-term growth, or weather economic uncertainty.

Workers

Benefit when businesses have access to capital to invest in their employees. These investments help support wages, benefits, and long-term opportunities, and build resilience to economic uncertainty, supporting jobs that might otherwise be at risk.

Investors

Long-term institutional investors, like pension funds, benefit from stable, reliable returns and diversification beyond public markets.

What Are the Benefits of Private Credit for Businesses?

Provides an alternative source of funding

Private credit provides an important source of capital for small and mid-sized businesses that may not be able to access traditional bank loans. It helps fill critical financing gaps when companies need flexible funding that banks may not be able to provide.

Offers loan structures that are individually tailored to businesses

Private credit loans are structured to match the specific needs of each business, including tailored covenants, timelines, and financing structures, which are particularly important when markets are uncertain or traditional lenders pull back.

Delivers quick access to funding

Private credit loans can often be executed more quickly and with greater certainty than traditional bank loans, allowing businesses to act on growth opportunities, investments, or refinancing needs without delay.

Deploys capital during economic uncertainty

Private credit can continue providing capital during periods of economic uncertainty, when other sources of financing may scale back, helping businesses maintain operations and invest for long-term growth.

Supported by long-term investors

Private credit is typically funded by long-term institutional investors such as pension funds, insurance companies, and endowments, providing a stable source of capital for businesses over time that is not susceptible to “run risks” that can lead to financial crises.

Provides access to experienced managers and investors

Private credit lenders work directly with businesses and remain engaged over the life of a loan, providing ongoing support, monitoring performance, and adapting financing as business needs evolve.

How is the Private Credit Industry Regulated?

Private credit funds are well regulated by the U.S. Securities and Exchange Commission and are structured to prevent risk. A recent report from the U.S. Government Accountability Office found that private credit lending practices are appropriate and that the debt structure, documentation, and underwriting are robust and adequately protective of lenders. A recent report by the Federal Reserve concluded that private credit funds do not pose significant financial stability vulnerabilities.

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